6 minutes; that's all it takes for someone who finds or steals your iPhone or other iOS device to decrypt your passwords. Researchers from the Fraunhofer Institute of Secure Information Technology have released a video showing how easy this is. They jailbreak the device, access the keychain file, and decrypt it. Any passwords you've stored will be accessible - your e-mail account, web sites, banking information, etc. There's not much we can say about this for now, other than to hope that Apple fixes this pretty quickly.
The researchers have published a paper with full details of the attack.